VAT in the GCC and your Vend Account


Latest update: - Mikey Jarvis

Disclaimer: this guide is for informational purposes only, and should not be relied upon as tax or legal advice. We encourage you to work with tax, legal and other professional advisers to determine exactly how the VAT rules may apply to your organization.

Who is in the GCC?

The GCC (Gulf Cooperation Council) is formed of the following countries;

  • Bahrain,
  • Kuwait,
  • Oman,
  • Qatar,
  • Saudi Arabia and
  • The United Arab Emirates

VAT Changes

What is happening?

The members of the GCC have agreed to introduce a VAT regime. VAT (Value Added Tax) is a consumption tax charged on goods and services. A large number of retailers will have to charge their customers VAT at the rate of 5%.

When?

Saudi Arabia and the United Arab Emirates have already introduced VAT, effective from 1 January 2018.

The other members are expected to introduce VAT in 2018 or 2019.

How does this affect me?

Generally, retailers in Saudi Arabia and UAE selling more than a certain value of goods or services must register for VAT and add VAT at 5% to the cost of their goods sold.

  • In the UAE, the threshold for VAT registration is AED 375,000 a year. Voluntary registrations are possible.
  • In Saudi Arabia, the threshold for VAT registration is SAR 375,000 a year. Voluntary registrations are also possible.

As VAT has not yet been introduced in other GCC countries, the exact requirements are either not yet known or potentially subject to change.

Invoice requirements

Generally, receipts and invoices provided to customers in the UAE and Saudi Arabia should be valid tax invoices for VAT purposes. This means that they need to contain certain prescribed information. A detailed list can be found in the VAT law here for the UAE and here for Saudi Arabia.

Types of invoice

Broadly speaking, there are two types of tax invoice; a simplified tax invoice and ‘full’ tax invoice.

Simplified invoices:

Simplified invoices can be used where the transaction is below a certain value - AED10,000 for UAE and SAR1,000 for Saudi Arabia. Where possible, its easiest to use simplified tax invoices.

Generally, a simplified tax invoice must have the following;

  • The words ‘tax invoice’ displayed in a prominent place
  • Date of issue
  • Your shop name, address and tax identification number
  • A description of the goods sold
  • The amount total payable
  • The total amount of tax payable (or for Saudi Arabia, a statement that the price includes VAT.)

‘Full’ invoices:

‘Full’ invoices have a number of additional requirements. Its best to look at the specifics as provided in the links above but the main additional requirements are:

  • Name and address of customer
  • Sequential invoice number
  • For the UAE, each type of good sold should have a separate line item showing unit price, quantity sold, VAT rate and the amount payable in AED. Currently, Vend does not support this, so we recommend using simplified invoices wherever possible.

We are looking to build features to make receipts customizable to meet the requirements in the GCC and be more flexible for you, but the ultimate responsibility to meet the VAT rules lies with you. This includes keeping copies of relevant business records, including tax invoices, for the required time period.

We’ll let you know more about our plans when details become available. In the meantime, we are keen to hear from you about changes that we could make to our receipts and product that will assist our customers with their compliance obligations.

Vend store set up and receipts set up

Depending on how your store is currently set up, you may need to make some changes as a result of the new VAT rules. Please see the guidelines below for more details.

Setting up Tax in Vend

  • The VAT Tax can be setup as a new Tax rate

Setting up Receipt templates and Receipt Preview

  • The word ‘tax invoice’ can be added to the receipt template to meet requirements. Vend supports this.
  • All other simplified invoice fields can also be accommodated by Vend.

Dual language receipts

What is happening?

Most GCC countries have introduced dual language invoice requirements, where invoices are required to be issued in Arabic and optionally, another language (e.g. English).

When?

The dates vary across the GCC, but most countries already have dual language requirements in place.

How does this affect me?

At the moment, Vend allows some Arabic language strings to be added to the invoice, to learn how to do this, click here. We are working on solutions to fully support the dual language invoicing requirements but currently cannot commit to a timeframe for this.

Disclaimer: this guide is for informational purposes only, and should not be relied upon as tax or legal advice. We encourage you to work with tax, legal and other professional advisers to determine exactly how the VAT rules may apply to your organization.

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